M/S Karve Constructions, Pune V. ITO, Pune

CO 121/PUN/2012

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0275 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-10-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 21-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Unexplained expenditure; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Documents seized
• Section: 69C; 143(3); 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS.470 TO 472/PN/2011 ASSESSMENT YEARS: 2000-01 TO 2002-03 THE INCOME TAX OFFICER, WARD 3(2), PUNE. . APPELLANT VS. M/S. KARVE CONSTRUCTIONS PROP. SHRI AJIT C. KARVE 1076/3, AJIT VILLA, VIDYA VIHAR COLONY, PUNE 411016 . RESPONDENT PAN: ACYPK3279R CO NOS.121 TO 123/PN/2012 ASSESSMENT YEARS: 2000-01 TO 2002-03 M/S. KARVE CONSTRUCTIONS PROP. SHRI AJIT C. KARVE 1076/3, AJIT VILLA, VIDYA VIHAR COLONY, PUNE 411016 . CROSS OBJECTOR PAN: ACYPK3279R VS. THE INCOME TAX OFFICER, WARD 3(2), PUNE. . RESPONDENT ITA NOS.424 TO 426/PN/2011 ASSESSMENT YEARS: 2000-01 TO 2002-03 AJIT CHINTAMAN KARVE 5, GAYATRI, 26, ASHOK NAGAR, PUNE 411007 . APPELLANT PAN: AACFK1449H VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 3, PUNE . RESPONDENT ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 2 ASSESSEE BY : DEEPA KHARE REVENUE BY : B.C. MALAKAR DATE OF HEARING : 16-12-2014 DATE OF PRONOUNCEMENT : 30-01-2015 ORDER PER SUSHMA CHOWLA, JM: OUT OF THIS BUNCH OF NINE APPEALS, THREE APPEALS ARE FILED BY THE REVENUE AGAINST THE CONSOLIDATED ORDER OF CIT(A)-II, PUN E, DATED 28.01.2011, RELATING TO ASSESSMENT YEARS 2000-01 TO 2002 -03 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 153C OF THE IN COME TAX ACT, 1961. THE ASSESSEE HAS FILED CROSS OBJECTIONS AGAINST TH E APPEALS FILED BY THE REVENUE IN ITA NOS.470 TO 472/PN/2011. FURT HER, THE ASSESSEE HAS FILED APPEALS AGAINST THE CONSOLIDATED ORDER OF CIT(A)-II, PUNE, DATED 28.01.2011 RELATING TO ASSESSMENT YEARS 2000 -01 TO 2002-03 AGAINST LEVY OF PENALTY UNDER SECTION 271D OF THE ACT. 2. THIS BUNCH OF APPEALS AND CROSS OBJECTIONS RELATING T O THE SAME ASSESSEE ON SIMILAR ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE REVENUE HAS RAISED IDENTICAL GROUNDS OF APPEAL IN IT A NO.470 TO 472/PN/2011, WHICH READ AS UNDER:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROS SLY ERRED IN DELETING THE ADDITION OF MADE BY THE ASSESSI NG OFFICER U/S. 69D OF THE INCOME-TAX ACT, 1961 BY ROUTI NELY FOLLOWING THE DECISION OF THE HON'BLE ITAT, PUNE BENCH, IN THE CASE OF HIMALAYA DISTRIBUTORS 125 TTJ 705(2009), INSTEAD OF CONFIRMING SUCH ADDITION. ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 3 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROS SLY ERRED IN FAILING TO APPRECIATE THE CIRCUMSTANCES OF THE CASE IN TOTALITY AND ALSO IN FAILING TO APPRECIATE THAT TH E EVIDENCES SEIZED AT THE TIME OF THE SEARCH AND RELAT ING TO THE ASSESSEE HAD ALL THE ATTRIBUTES OF A HUNDI AND THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN MA KING ADDITION ON ACCOUNT OF BORROWAL BY APPLYING THE PROVISION OF SEC. 69D OF THE INCOME-TAX ACT, 1961. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROS SLY ERRED IN DELETING THE ADDITION BY MAKING A VERY NARROW INTERPRETATION OF 'HUNDI' WITHIN THE MEANING OF SEC.6 9D OF THE ACT AND WITHOUT APPRECIATING THAT IN VIEW OF THAT RELEVANT PROVISION OF THE NEGOTIABLE INSTRUMENT ACT, 18 81 THE WORD 'HUNDI' USED IN SEC.69D REQUIRES TO BE VIEW ED / INTERPRETED BROADLY; AND, SO DONE, THE SEIZED DOCUMEN TS RELATING TO THE PRESENT ASSESSEE READ WITH THE MODU S- OPRANDI ADOPTED BY THE SHRIRAM SONI GROUP WOULD CLEAR LY QUALIFY TO BE CONSIDERED AS 'HUNDI'. 5. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME-TAX (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OR ALL THE GROUNDS OF APPEAL. 4. THE ASSESSEE HAS RAISED THE FOLLOWING IDENTICAL GROUNDS O F OBJECTIONS IN CO NOS.121 TO 123/PN/2012:- 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFI RMING ADDITION ON ACCOUNT OF RS.57,750/- AND ON ACCOUNT OF BROKERAGE OF RS.8,250/- U/S.69C WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THERE WAS NO FINANCIAL TRANSACTIONS BETWEEN THE ASSESSEE AND SHRI S H SONI. 5. THE FACTS IN EACH OF THE ASSESSMENT YEARS ARE IDENTICA L. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS IN ASSESSME NT YEAR 2000-01 I.E. ITA NO.470/PN/2011 TO ADJUDICATE THE ISSUES RAISED IN THE PRESENT SET OF APPEALS FILED BY THE REVENUE AND CRO SS OBJECTIONS MOVED BY THE ASSESSEE. ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 4 6. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE WAS A PROMOTER AND BUILDER AND FOR THE YEAR UNDER CONSIDERATION, THE AS SESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,05 ,766/-. DURING THE COURSE OF SEARCH OPERATION UNDER SECTION 132 OF THE ACT IN THE CASE OF SHRI SHRIRAM H. SONI ON 29.07.2003, VARIOUS DOC UMENTS WERE FOUND AND SEIZED ALONG WITH BOOKS OF ACCOUNT. THE S AID DOCUMENTS RELATED TO THE MONEY LENDING BUSINESS OF THE A SSESSEE. THE ASSESSING OFFICER NOTES THAT APART FROM THE REGULAR TRANS ACTIONS RELATING TO FINANCE AND BROKERAGE, INCRIMINATING DOCUMENTS RELATING TO ADVANCE OF CASH LOANS RUNNING INTO SEVERAL CRORES OF RUPE ES WERE FOUND AND SEIZED. THE SAID DOCUMENTS WERE MOSTLY IN THE FORM OF BLANK PROMISSORY NOTES SIGNED BY THE BORROWERS, BLANK UN DATED CHEQUES DULY SIGNED BY THE BORROWERS WITH AMOUNTS OF LO ANS MENTIONED. BESIDES, THE ENTRIES IN THE CASH BOOK OF ABOV E PART PERIOD, VIDE B.NO.100 / PANCHANAMA, DATED 02.08.2003, CHECKLIST OF BORROWERS INDICATING THE DUE DATES OF PAYMENT OF INTEREST AND BROKERAGE TO SHRI SONI, HAD BEEN FOUND FOR THE PERIOD FROM 01.01.2000 31.12.2002 I.E. B.NO.98 AND 99 OF PANCHANAMA DATED 02.08.200 3. AS PER THE ASSESSING OFFICER, THE METHOD FOLLOWED BY SHRI SONI WAS THAT CASH LOANS WERE NORMALLY ADVANCED FOR 90 DAYS AFTER DED UCTING THE INTEREST AMOUNT VARYING BETWEEN 1.5% TO 2% PER MONTH A ND ALSO BROKERAGE AMOUNT VARYING 0.25% TO 0.50% PER MONTH. AS AGAINST LOA N OF RS.1,00,000/-, THE BORROWER RECEIVED ONLY RS.94,750/- AFT ER DEDUCTING INTEREST OF RS.4,500/- @ 1.50% FOR THREE MONTHS AND BROKERAGE OF RS.750% @ 0.25% PER MONTH FOR THREE MONTHS . AT THE TIME OF BORROWING OF CASH LOANS, THE BORROWER HANDED OVE R THE BLANK CHEQUES OF THE FULL AMOUNT BORROWED AND ALSO PROMISSORY N OTES. ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 5 ANOTHER PROMISSORY NOTE FOR 1% OF THE AMOUNT BORROWED WAS ALSO OBTAINED FROM THE BORROWER, WHICH WAS TO KEEP TRACK OF T HE INTEREST PAYMENT ON DUE DATES BY THE BORROWER. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE A SSESSEE AS TO WHY A SUM OF RS.33,00,000/- PLUS INTEREST AND BROKERAG E PAID TO SHRI SONI SHOULD NOT BE ADDED TO HIS TOTAL INCOME. IN REP LY, THE ASSESSEE SUBMITTED THAT HE HAD NO FINANCIAL DEALINGS WITH S HRI SONI AND EXPLANATION SHOULD BE SOUGHT FROM HIM REGARDING THE E NTRIES INVOLVING THE NAME KARVE CONSTRUCTION APPEARING IN THE DO CUMENTS. IT MAY BE CLARIFIED THAT THE ASSESSEE WAS CARRYING ON IT S BUSINESS AS SOLE PROPRIETOR UNDER THE NAME AND STYLE OF KARVE CONS TRUCTION. THE ASSESSING OFFICER DID NOT FIND THE EXPLANATION OFFERED BY THE ASSESSEE TO BE SATISFACTORY AS THE CASH BOOKS SEIZED DURING THE COURSE OF SEARCH OPERATION REVEALED THE NAME OF ASSESSEE ENLISTED AMONG T HE NAMES OF BORROWERS. THE ASSESSING OFFICER CONCLUDED THAT THE EVIDE NCE FOUND DURING THE COURSE OF SEARCH OPERATION IN THE CASE OF SH RI SONI PROVED THAT THE ASSESSEE HAD BORROWED LOANS IN CASH FROM SHRI SONI AND HAD HANDED OVER THE COPY OF AGREEMENTS TO SALE OF FLATS IN HA REKRISHNA PATH, MODEL COLONY, BHAMBURDA, SHIVAJINAGAR, PUNE AS SECURIT Y FOR REPAYMENT OF THE SAID LOAN. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PROVISIONS OF SECTION 69D OF THE ACT WERE SQUARELY A PPLICABLE. ACCORDINGLY, SUM OF RS.33,00,000/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 69D OF THE ACT. THE ASSESS ING OFFICER IN ASSESSMENT YEAR 2001-02 MADE AN ADDITION OF RS.52,00,000 /- AND IN ASSESSMENT YEAR 2002-03 OF RS.22,00,000/-. THE ASSESSING OFFICER IN ASSESSMENT YEAR 2001-02 MADE AN ADDITION OF RS.3,68,500/- AND AN ADDITION OF RS.1,54,000/- IN ASSESSMENT YEAR 2002-03. ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 6 7. BEFORE THE CIT(A), THE ASSESSEE CLAIMED THAT SHRI SHIKAN T H. SONI, REAL BROTHER OF SHRI SHRIRAM H. SONI WANTED TO PURCH ASE THE DUPLEX FLATS BEARING NOS.3 AND 4 IN SHIVAJINAGAR, PUNE AND HE HAD ALSO PAID EARNEST MONEY OF RS.1 LAKH VIDE CHEQUE ON 25.02 .2000. AS HE WANTED TO MAKE A PROPOSAL FOR BANK LOAN FOR PURCHASE OF THE SAID FLATS, UNDATED SIGNED AGREEMENTS TO SALE AND STAMP RECEIP TS WERE HANDED OVER. HOWEVER, THE BANK LOAN WAS NOT SANCTIONED AND HENCE, THE AGREEMENTS WERE CANCELLED AND THE EARNEST MONEY O F RS.1 LAKH WAS FORFEITED BY THE ASSESSEE. THE ASSESSEE FURTHER EXP LAINED THAT THE SAID FLAT NOS.3 AND 4 WERE SOLD VIDE REGISTERED AGREEMENTS OF SALE EXECUTED ON 03.10.2001 FOR RS.12 LAKHS AND 01.11.2001 FOR RS.11 LAKHS, RESPECTIVELY. IN THE CIRCUMSTANCES, THE ESTIMATION OF THE ASSESSING OFFICER THAT THE ASSESSEE HAD BORROWED RS.1,07,0 0,000/- AGAINST THE SECURITY OF THE SAID FLATS UNDER CONSTRUCTION WAS ABSURD AND ILLOGICAL. 8. THE NEXT CONTENTION RAISED BY THE ASSESSEE WAS THAT IF THE AMOUNTS WERE BORROWED AGAINST THE SECURITY OF FLATS AS A LLEGED BY THE ASSESSING OFFICER, THEN THE SAME WOULD NOT HAVE BEEN SOLD BY THE ASSESSEE. THE ASSESSEE FURTHER POINTED OUT THAT IT NEV ER HAD ANY FINANCIAL RELATIONSHIP WITH SHRI SHRIRAM H. SONI AND DESPITE RE PEATED REQUESTS, NO OPPORTUNITY OF CROSS-EXAMINATION OF SHRI SON I WAS GIVEN, THOUGH REQUEST WAS MADE FOR GRANTING OPPORTUNITY TO CR OSS-EXAMINE SHRI SONI. WITHOUT PREJUDICE, AN ALTERNATE SUBMISSION WAS MADE THAT EVEN ON THE BASIS OF ALLEGED ANNEXURE TO THE SATISFACTION NOTE OF THE ADDL.CIT, RANGE-2, PUNE, THE BORROWINGS WORKED OUT TO RS.1 0 LAKHS AND THERE WAS NO MERIT IN MAKING ABOVE ADDITION OF RS.33 LAKHS. ANOTHER PLEA WAS RAISED WITHOUT PREJUDICE THAT NOT EVEN A SINGLE ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 7 HUNDI OR ALLEGED PROMISSORY NOTE SIGNED BY THE ASSESSEE WAS SEIZED FROM MR. SHRIRAM H SONI AND IN THE CIRCUMSTANCES, NO ADDITIO N COULD BE MADE UNDER SECTION 69D OF THE ACT. 9. THE CIT(A) NOTED THAT THE DOCUMENTS WERE SEIZED DUR ING THE COURSE OF SEARCH AND SEIZURE ACTION TAKEN IN THE CASE O F MR. SHRIRAM H SONI ON 29.03.2003. IT WAS FURTHER OBSERVED BY THE CIT(A ) THAT THE AUTHENTICITY AND VERACITY OF THESE SEIZED DOCUMENTS H AS BEEN DULY DISCUSSED, ANALYSED AND ACCEPTED IN THE ITAT, PUNES O RDER DATED 17.06.2010 IN ITA NO.474 TO 478 & 518/PN2007 FOR ASSES SMENT YEARS 1998-99 TO 2003-04, IN THE CASE OF SHRI SHRIRAM H. SON I, WHICH HAS ALSO UPHELD THE AUTHENTICITY OF THE ENTRIES MADE IN THE DO CUMENTS. THE CIT(A) FURTHER OBSERVED THAT THE TRIBUNAL IN THE CASE OF SHRI SHRIR AM H SONI (SUPRA) HAD ACCEPTED THAT ON THE SEIZED DOCUMENTS BUNDLE NO.100, WHICH WAS TREATED AS CASH BOOK, THERE WERE NAME S OF THE LENDERS AS WELL AS THE BORROWERS FOR THE CASH FLOW FOR INTE REST PAYMENT, REPAYMENT OF LOAN, ETC. BASED ON THIS OBSERVATION, THE T RIBUNAL ACCEPTED THAT SHRI S.H. SONI WAS A FINANCE BROKER AND IT W AS FURTHER HELD THAT THERE WERE INVESTORS NAMES MENTIONED IN THE DOCUMENTS SEIZED VIDE BUNDLE NOS.98 & 99, AND THESE DULY SHOWED TH E NAMES OF INVESTORS AND BORROWERS UNDER THE RESPECTIVE HEAD S. THE CIT(A) VIDE PARA 3.6 FURTHER OBSERVED AS UNDER:- 3.6 THE TRIBUNAL IN PARA 11.11 OF THE ORDER HAS ELAB ORATELY DISCUSSED THE CONTENTS OF BUNDLE NO.100 WHICH IS ADMIT TEDLY WRITTEN BY SHRI SUNIL RATNAKAR, ACCOUNTANT OF SHRI S .H. SONI, WHO EXPLAINED THE NATURE OF UNACCOUNTED TRANSACTIONS. THEREFORE, THE TRIBUNAL HAS ACCEPTED THE AUTHENTICITY OF THE E NTRIES IN THE SEIZURE DOCUMENTS AND HAS NOT ACCEPTED THE CONT ENTION THAT ANY OF THESE DOCUMENTS WERE DUMB DOCUMENTS. TH E AUTHENTICITY OF THESE ENTRIES IN THE CASE OF SHRI S .H. SONI HAVE, THEREFORE, BEEN UPHELD BY THE ITAT IN THE ORD ER DATED 17.06.2010 AND THERE CANNOT BE ANY DOUBT ABOUT THE SAME. IN VIEW OF THE ABOVE FINDINGS NOTED FROM THE ITAT'S ORDER DATED 17.06.2010, IT WAS OBVIOUS THAT THE ENTRIES UNDER THE HEAD ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 8 'INVESTORS' IN BUNDLE NOS. 98 AND 99 RELATED TO THE P ARTICULAR PERSONS MENTIONED THEREIN I.E. THE INVESTORS HAD INFA CT ADVANCED THE PARTICULAR AMOUNTS TO SHRI S.H. SONI, WHO WAS A FI NANCE BROKER, AND WHO IN TURN HAD ADVANCED IT TO OTHER PERS ONS WHO WERE INTERESTED IN BORROWING FROM SHRI S.H. SONI. THE APPELLANT'S NAME WAS MENTIONED REPEATEDLY AS A BORROWER IN THES E DOCUMENTS. IN ACCORDANCE WITH THE ELABORATE METHOD DISC USSED IN THE TRIBUNAL'S ORDER AS WELL AS THE NOTINGS ON THE SEIZ ED DOCUMENTS WHICH SHOWED THE RATE OF INTEREST, PERIOD FOR WHICH IT WAS GIVEN ETC. AND ITS CORROBORATION BY THE ENTRIES O N DOCUMENTS IN BUNDLE NO. 100, WHICH WAS IN THE NATURE OF CASH BOA K, AND RECORDED THE INCOMINGS /OUTGOINGS OF THE INTEREST A MOUNT AS WELL AS THE PRINCIPAL; THERE IS NO DOUBT ABOUT THE CORRECT NESS OF THIS CONCLUSION. 10. THE CIT(A) FURTHER RELYING ON THE RATIO LAID DOWN BY T HE HONBLE SUPREME COURT IN SUMATI DAYAL VS. CIT (1995) 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC), PAGES 5 45 AND 547, OBSERVED THAT THE APEX COURT HAD STRESSED THE IM PORTANCE OF CIRCUMSTANTIAL EVIDENCE AND PREPONDERANCE OF PROBABILITY. I T WAS ALSO HELD THAT THE TAX AUTHORITIES WERE ENTITLED TO LOOK INTO T HE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY, AND THE MATTER HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILITIES. TH E CIT(A) THUS, HELD THAT IN VIEW OF THE ABOVE FACTS AND EVIDENCES LEAD TO THE EXISTENCE OF COMPELLING CIRCUMSTANTIAL EVIDENCE AND APPLYING THE TEST OF HUMAN PROBABILITIES, IT WAS THE NATURAL CONCLUSION THAT THE ASSESS EE WAS THE BORROWER TO THE TUNE OF AMOUNTS MENTIONED IN T HREE ASSESSMENT YEARS ON SECURITY OF AGREEMENTS TO SELL THE PROPERTY. SINCE THE ASSESSEE HAD NOT ABLE TO SATISFACTORILY EXPLAIN AS TO WHY THE BLANK AGREEMENTS TO SALE WITH FLAT DETAILS MENTIONED, DULY SIGNED BY HIM WERE FOUND IN THE POSSESSION OF SHRI SONI DURING THE SEARC H AND WHERE THE ENTRIES ON SEIZED DOCUMENTS MENTIONS SPECIFICALLY THE ASSESSEES NAME FOR VARIOUS LOANS / INTEREST / BROKERAGE, ETC., THE A SSESSEES EXPLANATION THAT NO MONEY WAS BORROWED FROM SHRI SHRIRAM H. SONI AND / OR THAT HE NEVER HAD ANY FINANCIAL RELATIONSHIP WITH HIM, WAS ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 9 FOUND TO BE NOT TENABLE. WHERE THE FACTUM OF BORROWINGS OF FUNDS AND PAYMENT OF INTEREST BY THE PERSONS MENTIONED ON THE SE IZED DOCUMENTS HAD BEEN ESTABLISHED AND ACCEPTED BY THE TR IBUNAL IN THE CASE OF SHRI SHRIRAM H. SONI, THE ONLY QUESTION REMAINS WAS MODUS OPERANDI ADOPTED BY THE ASSESSEE. THE CIT(A) FURTHER NO TES THAT UNLIKE THE OTHER SUCH CASES, THE SECURITY FOR THE BORROW INGS WERE NOT BLANK UNDATED CHEQUES AND BLANK PROMISSORY NOTES SIGNED BY THE BORROWER, WHICH WAS THE MODUS OPERANDI IN OTHER CASES. THE SECURITY GIVEN FOR BORROWING IN THE PRESENT FACTS OF THE ASSESSEE WAS THE AGREEMENTS TO SALE OF THE FLATS AT SHIVAJINAGAR. THE CIT(A ) THUS, HELD THAT BY NO STRETCH OF IMAGINATION SUCH A BORROWING ON THE BASIS OF SUCH A SECURITY COULD QUALIFY AS HUNDI U/S.69D OF THE ACT, WHICH WAS FOR BORROWING ON THE BASIS OF HUNDI ONLY. THE CIT(A) HAD NOTED THAT THE ASSESSEE HAD CONTESTED THE SAID ADDITION BY WAY OF ALTE RNATE SUBMISSION, ON WITHOUT PREJUDICE BASIS, RELYING ON THE DECIS ION OF PUNE BENCH OF THE TRIBUNAL IN HIMALAYA DISTRIBUTORS VS. ITO (2009) 125 TTJ 705 (PUNE), WHICH RELATED TO THE SAME SEARCH IN THE CASE OF SHRI SHRIRAM H. SONI AND SEIZURE OF EXACTLY THE SAME DOCU MENTS AS DISCUSSED ABOVE. THE TRIBUNAL IN THE SAID CASE HELD THA T THE SEIZED DOCUMENTS IN THE NATURE OF BLANK PROMISSORY NOTES FROM S HRI SHRIRAM H. SONI WERE NOT HUNDIS TO WHICH ONLY SECTION 69D WOULD A PPLY. THE CIT(A) UNDER PARA 3.9 HAS REPRODUCED THE FINDING OF THE TR IBUNAL AT PAGES 14 TO 17 OF THE APPELLATE ORDER, WHICH HAVE BEEN R EFERRED TO, BUT ARE NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. THE C IT(A) VIDE PARA 3.10 OBSERVED THAT IN THE PRESENT CASE, THERE WAS NOT EVEN THE EXISTENCE OF ANY PROMISSORY NOTE AND BLANK CHEQUE/S SIGN ED BY THE ASSESSEE WERE FOUND, WHICH WAS APPARENT FROM THE LETTER OF THE ADDL.CIT GIVING INTIMATION UNDER SECTION 153C OF THE ACT AND IN THE ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 10 ABSENCE OF SUCH DOCUMENTS THAT CASH LOANS WERE TAKEN BY THE ASSESSEE FROM SHRI SHRIRAM H. SONI, ON THE BASIS OF SECUR ITY OF AGREEMENTS TO SALE, THE LOANS COULD NOT BE TREATED AS INCOME OF THE ASSESSEE UNDER SECTION 69D OF THE ACT, IN THE ABSENCE OF ANY HUNDI. THE ADDITIONS MADE UNDER SECTION 69D OF THE ACT WERE THUS, DELET ED BY THE CIT(A). 11. HOWEVER, THE CIT(A) UPHELD THE ADDITION MADE UNDER SEC TION 69C OF THE ACT FOR UNEXPLAINED EXPENDITURE IN EACH OF THE THREE YEARS ON ACCOUNT OF INTEREST AND BROKERAGE AS IT HAD BEEN ES TABLISHED ON RECORD THAT THE CASH LOANS WERE TAKEN BY THE ASSESSE E FROM SHRI SHRIRAM AND INTEREST AND BROKERAGE IN CASH WERE ALSO PA ID ON THE LOANS TO SHRI SHRIRAM H. SONI OR HIS CONCERN. THE SAME W AS CLEARLY REVEALED FROM THE SEIZED DOCUMENTS VIDE BUNDLE NO.98, 99 A ND 100 IN THE CASE OF SHRI SHRIRAM H. SONI. THE CIT(A) FURTHER HELD TH AT THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI SHRIRAM H. SONI (SUPRA) HAD UPHELD THE AUTHENTICITY AND VERACITY OF THE ENTRIES MADE ON THE SEIZED DOCUMENTS AND IT WAS ALSO ACCEPTED THAT THE ENT RIES WERE MADE FOR INTEREST AND BROKERAGE AGAINST THE CORRESPONDING LOA N AMOUNT ON THESE ACCOUNTS. IN VIEW THEREOF, THE ADDITIONS MADE UNDE R SECTION 69C OF THE ACT WERE UPHELD. 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE P LACED RELIANCE ON THE ORDER OF ASSESSING OFFICER IN RESPECT OF G ROUND OF APPEAL RAISED IN REVENUES APPEAL AND ORDER OF CIT(A) AGAIN ST CROSS OBJECTIONS FILED BY THE ASSESSEE. THE OBJECTION OF THE LEA RNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGAR D WAS THAT THE BASIC THEORY OF BORROWING OF LOAN WAS INDICATED AS THE ALLE GATION WAS THAT THE SAID LOANS WERE BORROWED ON THE SECURITY OF BLA NK SIGNED ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 11 AGREEMENTS TO SALE FOUND FROM THE POSSESSION OF SHRI SHR IRAM H. SONI, WHICH IN TURN, WERE THE SECURITY FOR THE LOANS ADVANCED. HOWEVER, THE ASSESSEE CLAIMS THAT THE SAID FLATS WERE SOLD TO THREE PA RTIES AND THE SAME PROVES THAT THERE WAS NO SECURITY FOR ADVANCING LO ANS. IN OTHER WORDS, NO MONEY WAS BORROWED BY THE ASSESSEE FROM SHR I SHRIRAM H. SONI AND THERE WAS NO FINANCIAL DEALING WITH HIM. THE CASE OF THE REVENUE WAS THAT IN THE SATISFACTION NOTE, THERE WAS ME NTION ABOUT THE BLANK CHEQUES / PROMISSORY NOTES AND MONEY ADVANC ED ON THE SAID BASIS. HOWEVER, IN THE CASE OF THE ASSESSEE, NO SUCH BILLS OF EXCHANGE WERE FOUND AND HENCE, THE STORY ALSO COULD NOT BE APPLIED. WITHOUT PREJUDICE TO THE ABOVE ARGUMENTS, THE LEARNED A UTHORIZED REPRESENTATIVE FOR THE ASSESSEE CLAIMED THAT THE FRESH LO AN ENTRIES IN THE HANDS OF THE ASSESSEE WERE TO THE EXTENT OF RS.10 LAKHS IN ASSESSMENT YEAR 2000-01. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E RECORD. THE PROVISIONS OF SECTION 69D OF THE ACT CATEGORICALLY PRO VIDED THAT WHERE ANY AMOUNT IS BORROWED ON HUNDI FROM OR ANY AMOU NT DUE THEREON, IS PAID TO ANY PERSON OTHERWISE THAN BY AN ACC OUNT PAYEE CHEQUE, THE AMOUNT SO BORROWED OR REPAID SHALL BE DEEME D TO BE THE INCOME OF THE PERSON BORROWING OR REPAYING THE SAME FOR THE PREVIOUS YEAR ONLY, THE AMOUNT SO BORROWED OR REPAID, AS THE CA SE MAY BE. THE PROVISO FURTHER PROVIDES THAT WHERE ANY AMOUNT BORROWE D ON HUNDI HAS BEEN DEEMED TO BE THE INCOME OF THE PERSON UNDER THE PROVISIONS OF ABOVE SECTION, THEN SUCH PERSON SHALL NOT BE LIABLE TO B E ASSESSED AGAIN IN RESPECT OF SUCH AMOUNT ON REPAYMENT OF THE SAM E. THE BASIC REQUIREMENT FOR APPLICATION OF THE PROVISIONS OF SECTION 69 D OF THE ACT IS THE BORROWAL OF AMOUNT ON A HUNDI OR ITS REPAYMENT ON A HUNDI OTHERWISE THAN THROUGH AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK. ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 12 IN CASE THE AMOUNT IS SO BORROWED OR REPAID ON HUNDI, T HEN THE SAME SHALL BE DEEMED TO BE THE INCOME OF THE PERSON BORROWING OR REPAYING THE SAME IN THE PREVIOUS YEAR TO WHICH IT RELATES. 14. COMING TO THE FACTS OF THE PRESENT CASE, PROCEEDING S WERE INITIATED AGAINST THE ASSESSEE BY THE ASSESSING OFFICER PUR SUANT TO SEARCH OPERATION CARRIED OUT UNDER SECTION 132 OF THE ACT IN THE CASE OF SHRI SHRIRAM H. SONI ON 29.07.2003 FROM WHOSE POSSESSION LARGE NUMBER OF DOCUMENTS INCLUDING CASH BOOK, ETC., WERE FOUND. THE INCRIMINATING DOCUMENTS REFLECTED THE ADVANCE OF CASH LOANS AND ALSO RECEIPT OF INTEREST AND BROKERAGE ON PERIODICAL BASIS. FUR THER, BLANK PROMISSORY NOTES AND / OR BLANK UNDATED CHEQUES DULY SIGNED BY THE BORROWER/S WERE ALSO FOUND FROM HIS POSSESSION. THE PRO CEEDINGS AGAINST INCRIMINATING DOCUMENTS FOUND FROM THE POSSESSION O F SHRI SHRIRAM H. SONI AND THE AUTHENTICITY AND VERACITY OF THE SAID DOCUMENTS WAS ANALYSED BY THE TRIBUNAL IN ITA NOS.474 TO 478 & 518/PN/2007 RELATING TO ASSESSMENT YEARS 1998-99 TO 2 003-04. THE TRIBUNAL VIDE ORDER DATED 17.06.2010 ACCEPTED THAT SHRI S HRIRAM H. SONI WAS A FINANCE BROKER AND IT WAS FURTHER HELD THAT T HE INVESTORS NAMES WERE MENTIONED IN THE DOCUMENTS SEIZED VIDE BUNDLE NOS.98 & 99 AND THESE ALSO DULY SHOWED THE NAMES OF INVESTORS A ND BORROWERS UNDER THE RESPECTIVE HEADS. THE TRIBUNAL THUS, UPHELD TH E AUTHENTICITY OF THE ENTRIES MADE IN THE SEIZED DOCUMENTS AND DID NOT ACCEPT THE CONTENTION THAT ANY OF THE SAID DOCUMENTS WERE DUMB DOCUMENTS. IN VIEW OF THE FINDING OF THE TRIBUNAL, THE AUTH ENTICITY OF THE TRANSACTION OF SHRI SHRIRAM H. SONI WITH THE ASSESSEE STANDS ESTABLISHED. IN THE DOCUMENTS SEIZED FROM SHRI SHRIRAM, IT TRANSPIRES THAT THE ASSESSEE HAD BORROWED LOANS FROM THE SAID MR. SONI AGAINST WHICH THE ASSESSEE HAD INCURRED THE EXPENDITURE OF INTER EST AND ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 13 BROKERAGE. THE CASE BUILT UP BY THE REVENUE WAS THAT THE ASSESSEE HAD BORROWED THE SAID MONEY AGAINST THE SECURITY OF THE FLATS OWNED BY THE ASSESSEE, BLANK AND SIGNED AGREEMENTS TO SALE IN RESPECT OF WHICH WERE FOUND FROM THE POSSESSION OF SHRI SHRIRAM H. SON I. THE PLEA OF THE ASSESSEE ON THE OTHER HAND, WAS THAT THER E WAS NO SUCH SECURITY HANDED OVER TO SHRI SHRIRAM H. SONI AS THE SAID FLATS WERE SOLD TO DIFFERENT PARTIES VIDE REGISTERED AGREEMENTS TO SA LE EXECUTED ON 03.10.2001 FOR RS.12 LAKHS AND ON 01.11.2001 FOR RS.11 LAKH S. THE ASSESSEE THUS, OPPOSES THE ORDER OF THE AUTHORITIES BELO W IN HOLDING THAT THE ASSESSEE HAD BORROWED A SUM OF RS.1,07,00,000/ - AGAINST THE SECURITY OF THE SAID FLATS WHERE THE TOTAL CONSIDERATION R ECEIVED BY THE ASSESSEE ON ITS SALES LATER ON WAS ONLY RS.12 LAKHS PLUS RS.11 LAKHS. 15. THE FIRST OBJECTION OF THE ASSESSEE WAS THAT IT HAD NOT BORROWED ANY LOANS FROM SHRI SHRIRAM H. SONI AS IT HAD NOT GIVEN AN Y SECURITY BY WAY OF AGREEMENTS TO SALE OF FLATS OWNED BY IT. WITHOU T PREJUDICE TO ITS EARLIER CONTENTION, THE ASSESSEE FURTHER POINTED OUT T HAT PRESUMING BUT NOT ADMITTING THAT IT HAD BORROWED THE AMOUNTS FROM SHRI SHRIRAM H. SONI, EVEN THEN ON THE BASIS OF ALLEGED ANNEXURE TO THE SATISFACTION NOTE OF ADDL.CIT, BORROWINGS HARDLY WORKED OUT TO RS.10 LA KHS IN ASSESSMENT YEAR 2000-01. THE NEXT OBJECTION RAISED BY THE ASSESSEE WAS THAT THE CIT(A) HAS COME TO A CORRECT FINDING THAT N O ADDITION WAS WARRANTED UNDER SECTION 69D OF THE ACT. 16. WE FIND THAT THE TRIBUNAL IN THE CASE OF HIMALAYA DISTR IBUTORS VS. ITO (SUPRA) WHICH RELATED TO SAME SEARCH IN THE FACTS OF SHRI SHRIRAM H. SONI AND SEIZURE OF SIMILAR DOCUMENTS WAS MADE, HELD, THAT THE SEIZED DOCUMENTS IN THE NATURE OF BLANK PROMISS ORY NOTES WERE NOT HUNDI TO WHICH THE PROVISIONS OF SECTION 69D OF T HE ACT WERE ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 14 TO BE APPLIED. THE TRIBUNAL IN TURN, PLACED RELIANCE ON THE RATIO LAID DOWN BY HONBLE MADRAS HIGH COURT IN CIT VS. K.P. ABDULLAH (1999) 240 ITR 947 (MAD) AND CALCUTTA BENCH OF THE TRIBUNAL IN AC IT VS. BISSHESHWARLAL MANNALAL & SONS (2002) 74 TTJ 994 (CAL.) AND RELEVANT OBSERVATIONS OF THE TRIBUNAL WERE REPRODUCED BY THE CIT (A) AT PAGES 14 TO 17 OF THE APPELLATE ORDER WHICH ARE NOT BEING REPR ODUCED FOR THE SAKE OF BREVITY. 17. THE HONBLE MADRAS HIGH COURT IN CIT VS. K.P. ABDULLAH (SUPRA) HAD DELIBERATED UPON THE NATURE OF DOCUMENTS BEFORE TH EM AND HELD THAT WHERE THERE IS AN UN-CONDITIONAL PROMISE TO PAY, THE PROVISIONS OF SECTION 69D OF THE ACT WERE NOT APPLICABLE. 18. HOWEVER, IN THE FACTS OF THE PRESENT CASE, UNDISPUTED LY, THE ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF ENTRIES IN THE SEIZED DOCUMENTS FOUND FROM THE POSSESSION OF SHRI SHRIRAM H. SONI. THE ASSESSEE AT PAGES 1 TO 2 OF THE P APER BOOK HAS ATTACHED COPY OF THE SATISFACTION NOTE RECORDED BY THE ADDL.CIT WHILE FORWARDING THE DOCUMENTS TO THE ASSESSING OFFICER VIDE LETT ER DATED 16.03.2007. THE SAID COMMUNICATION RELATES TO THE MODUS O PERANDI ADOPTED BY SHRI SHRIRAM H. SONI WHEREIN THE INCRIMINATING DOCUMENTS FOUND FROM HIS POSSESSION DEPICTED ADVANCING OF CASH LOAN R UNNING INTO SEVERAL CRORES OF RUPEES. THE DOCUMENTS WERE IN TH E FORM OF BLANK PROMISSORY NOTES SIGNED BY THE BORROWERS, BLANK UN DATED CHEQUES DULY SINGED BY THE BORROWERS WITH THE AMOUNT OF LOAN MENTIONED AND FURTHER THERE WERE ENTRIES IN THE CASH BO OK OF PART PERIOD I.E. VIDE BUNDLE NO.100 OF PANCHANAMA DATED 02.08.2003 , CHECKLIST OF BORROWERS INDICATING THE DUE DATES OF PAYMENT OF INTEREST AND BROKERAGE TO SHRI SHRIRAM H. SONI WERE FOUND FOR THE PERIOD FROM ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 15 01.01.2000 TO 31.12.2002 I.E. BUNDLE NOS.98 & 99 OF PANCHANAMA DATED 02.08.2003. THE ADDL.CIT FURTHER EXPLAINS THE METHOD FOLLOWED BY SHRI SHRIRAM H. SONI WHICH WE HAVE ALREADY MENTIONED IN THE BRIEF FACTS OF THE CASE. AT THE TIME OF BORROWING CASH LOANS, THE MODUS OPERANDI WAS THAT THE BORROWER HAD TO HAND OVER A BLA NK CHEQUE FOR THE FULL AMOUNT BORROWED AND ALSO PROMISSORY NOTE. ANOT HER PROMISSORY NOTE WAS ALSO OBTAINED FROM THE BORROWER TO KEEP TRACK OF THE INTEREST PAYMENTS. VIDE PARA 3, THE DETAILS OF DOCUM ENTS RELATING TO THE ASSESSEE BEFORE US WERE ENCLOSED AS ANNEXURE T O THE LETTER DATED 16.03.2000. THE PHOTOCOPIES OF THE RELATED DOCUMENTS WE RE ALSO HANDED OVER. THE ADDL.CIT FURTHER HOLDS THAT THE FACTUM OF BORROWING CASH LOANS AND PAYMENT OF INTEREST AT THE RATE INDICATED IN THE DOCUMENTS WAS PROVED AND NECESSARY ACTION UNDER VARIO US PROVISIONS OF THE ACT SHOULD BE EXAMINED BY THE ITO CONCERNED. TH E PERUSAL OF THE ANNEXURE TO THE STATED LETTER REFLECTS THE NAME OF THE ASSESSEE I.E. KARVE CONSTRUCTION OF PROPRIETOR SHRI AJIT C. KARVE WITH COMPLETE ADDRESS OF THE ASSESSEE MENTIONED THEREIN. ON THE RIGHT HAND SIDE THERE IS MENTION OF FIGURE 13.10 L, THEN THERE IS REFERENCE TO S3, B-62 ANNEXURE A, P DATED 2.08.03, 1156 RV AND IT TALKS OF 18 LA KHS IN DEC 99/B98. THEN BUNDLE 62 IS THE AGREEMENT TO SELL ON STA MP PAPER DATED 22.12.1999 IN RESPECT OF FLAT NOS.4 AND 3 IN HAREKRIS HNA PATH, SHIVAJINAGAR, PUNE AND UNDATED RECEIPTS OF CONSIDERATION, S PECIAL POA UNSIGNED IN THE NAME OF SR SONI AND PLAN. FURTHER, S3, B-1 00, ANNEXURE A, PANCHANAMA DATED 2.08.03, 1156, RPETH, PUNE REFLECTS INTEREST PAYMENTS NO.1, PAGE 4 SHOWS PAYMENT OF 13,500/- ON 07.09.2000 ON CASH LOANS OF RS.2 LAKHS, RS.60,750/- ON 29.09.2 000 ON CASH LOAN OF RS.9 LAKHS (PAGE NO.22), RS.27,000/- ON 1 8.10.2000 ON CASH LOAN OF RS.4 LAKHS (PAGE 38), PAGE 67 SHOWS PAYM ENT OF ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 16 RS.13,500/- ON 23.11.2000 ON CASH LOAN OF RS.2 LAKHS. SIM ILARLY, SEVERAL PAGES WERE FOUND IN RESPECT OF THE INTEREST PAY MENTS WHICH ARE DEPICTED AT PAGE 2 WHICH IS ANNEXURE TO LETTER DATED 16 .03.2007. ANOTHER SET OF DOCUMENTS I.E. S-3, B-98, ANNEXURE A PANCH ANAMA DATED 2.08.03, 1156, RPETH, PUNE REFLECTS THE STATUS OF CASH LOANS. PAGE 87 SHOWS FRESH ADVANCE OF CASH LOAN OF RS.4 LAKHS ON 19.01.2000, PAGE 88 SHOWS FRESH ADVANCE OF CASH LOAN OF RS .2 LAKHS ON 11.02.2000 AND PAGE 90 SHOWS FRESH ADVANCE OF CASH LO AN OF RS.4 LAKHS ON 18.03.2000, PAGES 91 TO 94 SHOWS OUTSTANDING CA SH LOAN OF RS.5 LAKHS ON 21.03.2000, RS.5 LAKHS ON 18.04.2000, RS.4 LAKHS ON 18.04.2000 AND RS.2 LAKHS ON 11.05.2000 RESPECTIVELY. FURT HER, THERE WAS REFERENCE TO SEVERAL OTHER PAGES IN THE SAID DOCUME NT ITSELF. IT IS A FACT POSITION THAT NO HUNDI ISSUED BY THE ASSESSEE WAS FOUND FROM THE POSSESSION OF SHRI SHRIRAM H. SONI DURING THE COURSE OF SEA RCH OPERATION. ADMITTEDLY, THE ENTRIES IN THE SEIZED DOCUMENT S REFLECT THE LOAN HAVING BEEN BORROWED BY THE ASSESSEE FROM SHRI SHR IRAM H. SONI. THE VERACITY OF SUCH ENTRIES HAS BEEN UPHELD IN THE HAN DS OF SHRI SHRIRAM H. SONI BY THE TRIBUNAL (SUPRA) AND IN VIEW OF SUCH CIRCUMSTANTIAL EVIDENCE, IT IS ESTABLISHED THAT THE ASSESSEE HAD BORROWED CASH LOANS FROM SHRI SHRIRAM H. SONI. HOWEVER, IN THE ABSENCE OF ANY HUNDI BEING FOUND DURING THE COURSE OF SEA RCH AND EVEN IF WE TREAT THE AGREEMENTS TO SALE AS THE SECURITY , THE SAME CANNOT IN ANY WAY QUALIFY AS HUNDI AS ENVISAGED UNDER SE CTION 69D OF THE ACT. THE PROVISIONS OF SECTION 69D OF THE ACT ARE AT TRACTED WHERE BORROWALS ARE MADE ON THE BASIS OF HUNDI AND IN THE ABSE NCE OF ANY HUNDI, THERE IS NO MERIT IN ANY ADDITION IN THE HANDS OF THE ASSESSEE UNDER SECTION 69D OF THE ACT. ACCORDINGLY, WE ARE IN CON FORMITY WITH THE FINDING OF CIT(A) IN THIS REGARD AND UPHOLDING THE SAME, W E ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 17 CONFIRM THE DELETION OF ADDITION MADE UNDER SECTION 69D OF T HE ACT AT RS.33 LAKHS IN ASSESSMENT YEAR 2000-01, RS.52 LAKHS IN ASS ESSMENT YEAR 2001-02 AND RS.22 LAKHS IN ASSESSMENT YEAR 2002-0 3. THUS, THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN THIS REGARD, ARE DISMISSED. 19. NOW COMING TO THE SECOND ASPECT OF THE ISSUE I.E. THE INTEREST EXPENDITURE AND BROKERAGE PAID BY THE ASSESSEE ON THE BORROWALS OF THE SAID LOAN FROM SHRI SHRIRAM H. SONI. THE EVIDENCES IN R ESPECT OF ENTRIES IN THE SEIZED DOCUMENTS WERE FOUND FROM THE POSS ESSION OF SHRI SHRIRAM H. SONI. THE COPIES OF THE SEIZED DOCUMENTS A RE PLACED AT PAGES 3 TO 31 OF THE PAPER BOOK. THE ASSESSING OFFIC ER ON THE PERUSAL OF THE SAID ENTRIES HAD HELD THAT THE ASSESSEE H AD INCURRED THE AFORESAID EXPENDITURE SINCE SHRI SHRIRAM H. SONI HAD MADE E NTRIES AS TO THE RECEIPT OF INTEREST ON THE ADVANCING OF LOANS TO THE ASSESSEE. IN VIEW OF THE INCRIMINATING DOCUMENTS FOUND THOUGH FROM THE POSSESSION OF LENDER AND THE AUTHENTICITY AND VERACITY O F THE SAID TRANSACTION HAVING BEEN ESTABLISHED IN THE HANDS OF THE LENDER I.E. SHR I SHRIRAM H. SONI, THE NECESSARY COROLLARY WAS THE ADDITION M ADE IN THE HANDS OF THE ASSESSEE WHERE THE ASSESSEE HAS FAILED TO FURNISH THE EVIDENCE AS TO THE SOURCE OF THE SAID INTEREST PAYMENT AND BROKERAGE PAYMENTS. ACCORDINGLY, WE UPHOLD THE ADDITION MADE IN THE HANDS OF THE ASSESSEE UNDER SECTION 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED EXPENDITURE ON INTEREST AND BROKERAGE. UPHOLDING THE OR DER OF CIT(A), WE DISMISS THE CROSS OBJECTIONS RAISED BY THE ASSESSEE, IN THIS REGAR D. 20. WE MAY MENTION HERE THAT AN OBJECTION WAS RAISED BY THE DEPARTMENT AGAINST THE CROSS OBJECTIONS FILED BY THE ASS ESSEE BEING TIME BARRED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR T HE ASSESSEE POINTED OUT THAT THE APPEALS OF THE REVENUE WERE FOR TH E FIRST TIME ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 18 FIXED ON 24.05.2012, ADJOURNMENT WAS SOUGHT AND APPEALS WERE ADJOURNED TO 08.07.2012. ON THE SAID DATE OF HEARING, THE RESPONDENT ASSESSEE MADE A REQUEST THAT THE COPIES OF APPEAL MEM OS WERE NOT RECEIVED BY THE ASSESSEE AND THE SAME MAY BE DIRECTED TO BE GIVEN TO THE ASSESSEE. PURSUANT TO THE RECEIPT OF THE SAID COPIE S OF THE MEMOS OF APPEAL, THE CROSS OBJECTIONS WERE FILED ON 21.08.2012, WHIC H WAS WITHIN THE PERIOD OF ONE MONTH FROM THE RECEIPT OF APPEAL M EMO FILED BY THE REVENUE. IN VIEW THEREOF, THE CROSS OBJECTIONS W ERE FILED IN TIME AND THERE WAS NO MERIT IN THE PLEA OF THE REVENUE THAT THE CROSS OBJECTIONS WERE TIME BARRED. 21. ON THE PERUSAL OF RECORD, WE FIND THAT THE CONTENTION OF ASSESSEE THAT IT HAD SOUGHT THE COPIES OF MEMO OF APPEALS VIDE LETT ER DATED 18.07.2012 IS CORRECT. HAVING RECEIVED THE COPIES OF MEMO OF APPEALS ON OR AFTER 18.07.2012, THE ASSESSEE FURNISHED THE CROSS OBJECTIONS ON 21.08.2012 AND THE SAME WERE FILED WITHIN THE PRESCRIBED TIME. IN VIEW THEREOF, WE FIND NO MERIT IN THE OBJECTIONS OF THE REVE NUE AND THE SAME ARE DISMISSED. 22. NOW COMING TO THE APPEALS OF THE ASSESSEE IN ITA NOS .424 TO 426/PN/2011 AGAINST THE LEVY OF PENALTY UNDER SECTION 271D OF THE ACT. 23. THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GROUNDS OF APPEAL IN ALL THE APPEAL, WHICH READ AS UNDER:- 1. THE LEARNED I.T. AUTHORITIES HAVE BLINDLY ACCEPTED THE CONTENTS OF THE ALLEGEDLY SEIZED DOCUMENTS FROM MR. SONI, THOUGH THE APPELLANT HAS DENIED ANY TRANSACTIONS WITH MR. SONI. 2. MOREOVER, THE I.T. AUTHORITIES HAVE MISINTERPRETED THE CONTENTS OF THE SEIZED DOCUMENTS. ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 19 3. THE APPELLANT CRAVES PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, DELETE ANY OR ALL GROUNDS OF APPEAL IF DEEMED NECESS ARY. 24. THE ISSUE RAISED IN THE PRESENT APPEAL WAS AGAINST TH E LEVY OF PENALTY UNDER SECTION 271D OF THE ACT WHICH ARE ATTRACT ED WHERE THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269SS OF THE ACT. 25. WE HAVE IN THE PARAS HEREINABOVE ON THE BASIS OF THE SEIZED DOCUMENTS FOUND FROM THE POSSESSION OF SHRI SHRIRAM H. SON I AND THE ENTRIES THEREIN HAVE COME TO A FINDING THAT THE ASSESSEE HAD BORROWED CASH LOANS FROM SHRI SHRIRAM H. SONI, AGAINST WHICH, IT HAD PA ID INTEREST AND BROKERAGE. WE HAVE DELETED THE ADDITION MA DE IN THE HANDS OF THE ASSESSEE BY HOLDING THAT THE PROVISIONS OF S ECTION 69D OF THE ACT WERE NOT APPLICABLE. HOWEVER, THE FACTUM OF ACC EPTANCE OF LOAN IN CASH BY THE ASSESSEE FROM SHRI SHRIRAM H. SONI AS REFLECTED IN THE SEIZED DOCUMENTS FOUND FROM THE POSSESSION OF SHRI SH RIRAM H. SONI, STANDS ESTABLISHED, IN VIEW OF THE FINDINGS OF THE TRIBUN AL IN THE HANDS OF SHRI SHRIRAM H. SONI, WHO WAS FOUND TO BE INDULGING IN BORROWING AND LENDING MONEY IN CASH ON WHICH, THERE WERE TRANSACTIONS OF INTEREST PAYMENT OR RECEIPTS AND ALSO BR OKERAGE PAYMENTS. WE HAVE ALREADY UPHELD THE ADDITION IN THE HAN DS OF THE ASSESSEE UNDER SECTION 69C OF THE ACT ON ACCOUNT OF IN TEREST PAYMENT BEING PAID TO SHRI SHRIRAM H. SONI BY THE ASSESSEE IN THE CAPTIONED ASSESSMENT YEARS BEING UNEXPLAINED AND ALSO MADE AN ADD ITION ON ACCOUNT OF BROKERAGE. 26. NOW, THE ISSUE ARISING BEFORE US IS IN RELATION TO THE V IOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT, WHICH PROVIDES THAT NO PERSON WOULD ACCEPT ANY LOAN OR ADVANCE IN CASH OTHERW ISE THAN BY CROSSED CHEQUE OR BANK DRAFT EQUIVALENT TO AND/OR ABOV E RS.20,000/-. ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 20 THE ASSESSEE ADMITTEDLY, HAD RECEIVED LOAN AMOUNT IN CAS H EXCEEDING THE LIMIT PRESCRIBED UNDER SECTION 269SS OF THE ACT AND A S SUCH, HAD VIOLATED THE SAID PROVISIONS OF THE ACT. ON VIOLATION OF THE SAID PROVISIONS, THE ASSESSEE WAS EXIGIBLE TO LEVY OF PENALTY UND ER SECTION 271D OF THE ACT. ACCORDINGLY, WE UPHOLD THE ORDERS OF AUTHORITIES BELOW IN LEVYING PENALTY UNDER SECTION 271D OF THE ACT. HO WEVER, THE CONTENTION OF THE ASSESSEE, WITHOUT PREJUDICE TO ALL ITS EA RLIER CONTENTIONS, WAS THAT DURING ASSESSMENT YEAR 2000-01, IT HAD ONLY BORROWED CASH LOAN OF RS.10 LAKHS AS AGAINST THE CASH LOA N OF RS.33 LAKHS ADDED IN THE HANDS OF THE ASSESSEE BY THE ASSESS ING OFFICER. THE BASIS FOR WORKING OUT THE CASH LOAN RECEIVED BY THE ASSESSEE FROM SHRI SHRIRAM H. SONI WERE THE DOCUMENTS SEIZED FROM THE P OSSESSION OF THE SAID PERSON, IN WHICH THE ENTRIES WERE OF THE CASH BORROWALS, OUTSTANDING LOANS AND EVEN INTEREST PAYMENTS WERE DEPIC TED. THE COPIES OF THE SAID DOCUMENTS ARE PLACED BY THE ASSESSEE IN THE PAPER BOOK AT PAGES 1 TO 31. IN THE INTEREST OF JUSTICE, WE D IRECT THE ASSESSING OFFICER TO VERIFY THE CONTENTION OF THE ASSESSEE IN THIS REGARD AND TO DETERMINE THE QUANTUM OF LOAN BORROWED BY THE A SSESSEE FROM YEAR TO YEAR. AFTER VERIFYING THE SAME FROM THE NOTINGS IN THE SEIZED DOCUMENTS AND DETERMINING THE AMOUNT OF DEFAULT UNDER SE CTION 269SS OF THE ACT, THE ASSESSING OFFICER SHALL LEVY PENALTY UNDER SECTION 271D OF THE ACT ON SUCH DEFAULT. THE ASSESSING OFFICER SHALL AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSES SEE BEFORE DETERMINING THE SAID FIGURE. IN VIEW THEREOF, THE GROUNDS O F APPEAL RAISED BY THE ASSESSEE IN ITA NOS.424 TO 426/PN/2011 A RE ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.424 TO 426, 470 TO 472/PN/2011 CO NOS.121 TO 123/PN/2012 KARVE GROUP 21 27. IN THE RESULT, THE APPEALS OF THE REVENUE IN ITA NOS.4 70 TO 472/PN/2011, THE CROSS OBJECTIONS FILED BY THE ASSESSEE IN CO NOS.121 TO 123 ARE DISMISSED AND THE APPEALS OF THE ASS ESSEE IN ITA NOS.424 TO 426/PN/2011 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS THE 30 TH DAY OF JANUARY, 2015. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 30 TH JANUARY, 2015. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE